The advantages and disadvantages of general contracting and subcontracting.
Thread Content
There is a small project, with a total construction area of around 40,000 square meters. The budget for reaction vessels and containers, along with instruments, piping installation, etc., is 400-500 million. It is a project for expansion in a different location, and the manufacturing process for the product is already quite mature. The factory has familiar suppliers of custom-made equipment, and it also has considerable experience and knowledge in selecting instruments and meters. We are the client. It is now in the construction phase. I would like to know the advantages and disadvantages of subcontracting and general contracting. Subcontracting is quite troublesome, as it requires a series of procurement processes as well as warehouse and project management staff. The owners also go to a lot of trouble. However, there is even less experience in controlling the quality of construction and installation. But fortunately, the costs are under control. Using a general contractor does save a lot of hassle, but it’s not clear by how much the cost will be higher. Additionally, it is also a challenge to ensure proper control of key equipment and to select instruments without causing any leaks of information. I’d like to hear the opinions of experienced architects.
The general contractor should do a good job in coordination; hire a professional supervision company to assist with quality control
For owners, a general contractor is more convenient. The total cost will not change much. The higher the total amount, the better the discount!
Find an organization that can keep things under control; otherwise you’ll have headaches later on
The general contractor also needs to make a profit, right? If my client enters into separate contracts for different sections, such as civil works, equipment, instrumentation, and installation. Shouldn’t we save a lot of money?
To be honest, you as the owner don’t even understand the basic concepts of general contracting, subcontracting, and parallel contracting. Where there is a general contractor, there are also subcontractors. Your question should be: the advantages and disadvantages of general contracting versus parallel contracting? In one sentence: If the owner has sufficient project management experience, a sufficient number of professionals (in design management, civil engineering, installation, procurement, mechanical and electrical systems, equipment, cost estimation, contracts, safety, quality, etc.), and a well-established organizational structure for managing the construction phase, then a parallel contracting approach to project management should be adopted. If not, opt for a turnkey contract. As for what form of subcontracting the general contractor will use? Which subcontractors to choose? Party A may make requests.
In the past, for our company’s projects, we would form project teams on our own. Materials such as civil engineering works, static equipment, mixing units, pumps, instruments, cables, pipe fittings, and other auxiliary items all need to be sourced from manufacturers and purchased by oneself. Our own people are following up on site. But sometimes the connection can be tricky. There are frequent issues of idling due to waiting for materials. The ability to manage projects as a whole also needs to be improved. So this time I kind of want to go with a general contractor. However, as the general contractor, I’m worried about quality and cost control. .
As the wise man said, if the various departments within a company lack the necessary skills in construction management, it is essential to employ an general contractor. Otherwise, coordination among parallel subcontractors will lead to serious problems: progress will be hindered, quality will not be guaranteed, and everything will become a mess with countless complications.